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Modeling the Effects of Agricultural Innovation and Biocapacity on Carbon

Dioxide Emissions in an Agrarian-Based Economy: Evidence From the
Dynamic ARDL Simulations

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DOI: 10.3389/fenrg.2020.592061

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Reviewed by:
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Gelişim Üniversitesi, Turkey
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*Correspondence:
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Received: 07 August 2020
Accepted: 07 December 2020
Published: 12 February 2021
Citation:
Ali A, Usman M, Usman O and
Sarkodie SA (2021) Modeling the
Effects of Agricultural Innovation and
Biocapacity on Carbon Dioxide
Emissions in an Agrarian-Based
Economy: Evidence From the Dynamic
ARDL Simulations.
Front. Energy Res. 8:592061.
doi: 10.3389/fenrg.2020.592061
Frontiers in Energy Research | www.frontiersin.org
ORIGINAL RESEARCH
published: 12 February 2021
doi: 10.3389/fenrg.2020.592061
Modeling the Effects of Agricultural
Innovation and Biocapacity on
Carbon Dioxide Emissions in an
Agrarian-Based Economy: Evidence
From the Dynamic ARDL Simulations
Aminu Ali 1, Monday Usman 2, Ojonugwa Usman 3,4 and Samuel Asumadu Sarkodie 5*
1
Department of Soil Science, Federal University of Agriculture, Makurdi, Nigeria, 2Department of Agricultural Science Education,
Federal College of Education (Technical), Potiskum, Nigeria, 3School of Business Education, Federal College of Education
(Technical), Potiskum, Nigeria, 4Department of Economics, Eastern Mediterranean University, Northern Cyprus, Turkey, 5Nord
University Business School (HHN), Bodø, Norway
In this paper, we modeled the effects of income, agricultural innovation, energy utilization,
and biocapacity on Carbon dioxide (CO2) emissions. We tested the validity of the
environmental Kuznets curve (EKC) hypothesis for Nigeria from 1981 to 2014. We
applied the novel dynamic autoregressive distributed lag (ARDL) simulations to develop
conceptual tools for policy formulation. The empirical results confirmed the EKC
hypothesis and found that agricultural innovation and energy utilization have an
escalation effect on CO2 emissions whereas income and biocapacity have long-run
emission-reduction effects. The causality results found agricultural innovation
attributable to CO2 emissions and observed that income drives energy demand.
Income, biocapacity, and energy utilization are found to predict changes in CO2
emissions. These results are validated by the innovation accounting
techniques—wherein 22.79% of agricultural innovation corresponds to 49.43% CO2
emissions—5.95% of biocapacity has 35.78% attributable CO2 emissions—and 1.61%
of energy spurs CO2 emissions by 16.27%. The policy implication for this study is that
energy efficiency, clean energy utilization and sustainable ecosystem recovery and
management are the surest ways to combat climate change and its impacts.
Keywords: dynamic ARDL simulations, agricultural value-added, biocapacity, Nigeria, CO2 sequestration, EKC
hypothesis
INTRODUCTION
Mitigation of climate change and its impacts on the environment and wellbeing are important global
issues in recent times. Climate change has a traceable course to excessive use of “unclean”
combustible energy, which disrupts the levels of carbon in the atmosphere, resulting to the
preservation of heat in the atmosphere (See Kasman and Duman, 2015; Usman et al., 2019;
Rafindadi and Usman, 2019; Agboola and Bekun, 2019; Usman et al., 2020a; Usman et al., 2020b).
Research on energy utilization and economic outgrowth effects of CO2 emissions has received
significant attention in the literature of environmental management. Essentially, within the
theoretical account of Environmental Kuznets Curve (EKC) hypothesis, it is reported that
1 February 2021 | Volume 8 | Article 592061
Ali et al.
economic development initially triggers environmental pollution
with increasing levels of income but declines afterward at
specified threshold of income level where environmental
awareness remains a priority (Grossman and Krueger, 1991).
A significant number of the extant literature have tested the
validity of the EKC hypothesis over the years lacking consensus.
The empirical results from most studies are that economic growth
trajectory heightens environmental pollution but declines
thereafter following improvements in livelihood and
environmental awareness, thereby validating the EKC
hypothesis (Shahbaz et al., 2013; Rafindadi, 2016; Shahbaz
et al., 2017; Mesagan et al., 2018; Rafindadi and Usman,
2019). On the contrary, some studies aptly posit that energy-
intensive economic outgrowth and environmental quality is not
in line with the EKC hypothesis (Inglesi-Lots and Bohlmaann
2014; Nasr et al., 2015). Therefore, the EKC-based empirical
findings are mixed and conflicting, hence, require further
empirical validation. Despite mitigating efforts by world
leaders geared toward CO2 sequestration, a substantial rising
of the contribution of CO2 to greenhouse gas (GHG) emissions
are reported over the years (IPCC, 2017). It is reported that CO2
contributes 76.6% of GHG emissions generated mostly by
developing economies in the quest to sustain economic
productivity. Between 1961 and 2011, CO2 emissions rose
from ∼9.4 billion metric tons to ∼34.6 billion metric tons
(IPCC, 2013). Equally, CO2 emissions increased from ∼29.7
billion tons to ∼33.4 billion tons between 1999 and 2017 (BP,
2018). In Nigeria, CO2 emissions remain a major threat to both
human and ecosystem development. As reported by the World
Bank (2015), as of 2014, Nigeria emitted 96,280.75 kilotons of
CO2, which was lower than 106,067.98 kilotons in 2005.
A large body of literature has linked climate change to
agricultural practices. As recently emphasized by Owusu and
Asumadu (2016), Shabbir et al. (2020), Agboola and Bekun
(2019), in addition to excessive consumption of energy from
the fossil fuel sources, agricultural practices have a substantial
effect on GHG emissions. Agriculture ranked is as the second-
highest contributor of GHG emissions and global warming,
contributing roughly 21% of the global anthropogenic GHG
emissions in the world (Blanco et al., 2014). This is because
most agricultural practices require greater energy consumption,
mostly sourced from fossil fuels (Blanco et al., 2014). Agriculture
may affect the ability of land to absorb heat and light, which can
lead to radioactive forcing. More so, deforestation and
desertification resulting from land use and fossil fuels can exert
upward pressure on anthropogenic carbon dioxide. Besides, raising
livestock such as cattle, pigs and poultry may contribute to methane
and nitrous oxide concentrations and emissions. On the other hand,
agriculture can substantially reduce the level of carbon emissions as
opined by the United Nations Food and Agricultural Organization
(FAO), (2016). This is supported by Reynolds and Wenzlau (2012)
who posit that agriculture innovation is reported to have a mitigation
effect on CO2 emissions. For example, some modern agricultural
practices can be powered by clean energy to reduce the effects of the
use of pesticides, irrigation, soil tillage, deforestation, and waste from
the plastic mulch, stubble burning, and other channels of GHG
emissions.
Frontiers in Energy Research | www.frontiersin.org
Agricultural Innovation and CO2 Emissions
Our study, therefore, hypothesizes that the effects of
agricultural innovation and biocapacity on CO2 emissions
have long- and short-term environmental consequences in
Nigeria. Given that Nigeria is an agrarian nation blessed with
natural resources, there are reports of its citizens engaging in
crude methods of agricultural practices that hamper
environmental sustainability. However, scientific literature on
the scope is limited for policy formulation. More so, Nigeria is
ranked among the top 10 countries with a dangerous precedent of
ambient air pollution (HEI, 2018). Besides, a recent study ranked
Nigeria as the sixth among 195 nations with the most
approximate cases of disability-adjusted life years from
exposure to air pollution (Owusu and Sarkodie, 2020a). Thus,
justifies the need to investigate the effects of agricultural
innovation and ecosystem dynamics on CO2 emissions. This
will have policy implication not only on carbon sequestration
but mitigating mortality and morbidity rates. Therefore, insights
from our study will provide supporting evidence for policymakers
in designing appropriate energy and environmental policies for
CO2 sequestration that underpins the Sustainable Development
Goals (SDGs). In terms of methodology, we use Lee-Strazicich
(L-S) structural break, causality test and novel dynamic
autoregressive distributed lag (ARDL) simulations
approach—to estimate the out-sample parameters of
counterfactual shocks in specific time periods and specified
exogenous regressor useful for policy formulation. This is the
first time such a novel out-sample, stochastic and simulation
technique has been utilized in extant literature for the
proposed theme.
LITERATURE REVIEW
The EKC hypothesis from the pioneering work of Kuznets (1955)
underpins the framework for this study. In its generic form,
Kuznets observed a nexus between income per capita and
inequality in such that income inequality would first rise and
decline as income increases. This hypothesis led to what is known
as EKC by Grossmann and Krueger (1991). The EKC hypothesis
postulates a parallel increase of both income level and emissions
until a threshold of income is achieved before a reduction in
emissions can be noticed thereafter. This hypothesis explains the
trade-off between sustained economic productivity and
environmental sustainability.
The nexus between economic productivity and ecological
degradation has gained prominence in extant literature since
the mid-90s. For example, a study found an “inversed U-shaped”
relationship where ecological pollution would increase at the
early stages of economic development but after a specified
threshold, economic outgrowth tends to mitigate ecological
pollution (Selden and Song, 1994). Similarly, several studies
have all reported an inverted U-shaped nexus between
economic growth and CO2 emissions (Galeotti et al., 2006;
Shahbaz et al., 2013; Rafindadi and Usman, 2019; Ike et al.,
2020a; Usman et al., 2020b). For example, Shahbaz et al. (2013)
applied the ARDL cointegration approach to investigate the effect
of energy intensity, economic growth, and globalization on CO2
2 February 2021 | Volume 8 | Article 592061
Ali et al.
emissions in Turkey. The findings documented the presence of
EKC and further revealed economic growth and energy intensity
exert positive pressure on CO2 emissions while globalization
reduces CO2 emissions. Similarly, a study by Rafindadi and
Usman (2019) using ARDL modeling approach with
controlled structural breaks validated the EKC hypothesis for
South Africa. A recent paper by Ike et al. (2020a) using a novel
quantile regression via quantile moments confirmed the EKC
hypothesis by controlling for oil production in oil producing
nations.
On the contrary, some studies reported that the EKC
hypothesis might not hold always. For example, “N-shaped”
relationship between productivity and emissions following a
hike in CO2 emission was observed for a small open economy
and industrialized country (Fried and Getzner, 2003). Similarly, it
is reported that the validity of the EKC is not certain in all
circumstances, hence, there is no certainty that an inversed-U
shaped link exists between economic productivity and pollution
(See Spangenberg, 2001). In a study by Nasr et al. (2015) found no
evidence to support the EKC in South Africa using a co-
summability technique with a century of data.
In recent times, many studies have incorporated the role of
energy utilization in testing the validity of the conventional EKC
hypothesis. The EKC hypothesis was tested in Romania by
incorporating energy utilization (Shahbaz et al., 2013). The
findings confirmed the EKC hypothesis and further revealed
energy utilization attributable CO2 emissions. Tiwari et al.
(2013) found EKC and bi-directional causality between growth
and CO2 emissions from accounting for coal, growth, and trade in
India. This means that economic growth first increases with
environmental pollution but after reaching a turning point,
increasing productivity improves environmental quality. Using
the ARDL approach for Portuguese economy over the period
1971 to 2008, the EKC was validated in both short- and long-run
in the presence of international trade, urbanization, and energy
consumption. The effects of coal energy, industrial production
and emissions were investigated in China and India (Shahbaz
et al., 2014). The results identified an inversed U-shaped for India
and U-shaped for China. It further showed that coal consumption
causes CO2 emissions in India while the feedback effect is
observed in China. The impact of energy and democracy on
CO2 emissions was investigated in India using the ARDL
methodology and found that, while energy increases CO2
emissions, democracy perhaps mitigates emissions (Usman
et al., 2019). Also, Usman et al. (2020b) incorporated
globalization, democracy, and energy consumption in a
standard EKC model for South Africa and confirmed an
inversed U-shaped link between growth and emissions of CO2.
Similarly, the EKC hypothesis was confirmed in Thailand, using
heterogeneous fossil fuel sources (Ike et al., 2020a).
Based on panel data settings, the interaction of income and
CO2 emissions was assessed in 43 developing countries (Narayan
and Narayan, 2010). The results revealed that CO2 emissions
significantly dropped with a rise in income, suggesting that the
hypothesis of EKC fails to hold. Conversely, Apergis (2016)
investigated the real GDP-CO2 emissions nexus in 15
countries and showed evidence of the EKC in most of the
Frontiers in Energy Research | www.frontiersin.org
Agricultural Innovation and CO2 Emissions
countries. More recently, Ike et al. (2020b) reported EKC for
15 oil-producing countries while exogenizing crude oil,
electricity, trade, and democracy. This understanding is
supported by Ike et al. (2020c) who found EKC for a panel of
G-7 both in country-specific and panel settings.
Unlike most studies, very few pieces of extant literature tested
for the EKC by exogenizing agricultural production. For example,
evidence of EKC with agriculture reducing the level of CO2
emissions in Turkey was reported (Dogan, 2016). Gagnon
et al. (2016) divulged that agriculture has no impact
significantly on emissions of carbon dioxide in Canada.
Gokmenoglu and Taspinar (2018) investigated the role of
agriculture in inducing CO2 emissions in Pakistan. The
empirical results observed the existence of EKC and further
discovered that agriculture increases CO2 emissions.
Furthermore, feedback causal relationships are noticed among
GDP, energy, agriculture, and CO2 emissions. The EKC position
in Nigeria examined by controlling for agriculture and foreign
direct investment (Agboola and Bekun, 2019). The results
obtained echoed the EKC hypothesis and thus documented
that agriculture deteriorates the environment in Nigeria.
A panel data methodology was used to analyze the effect of
agriculture on CO2 emissions for Southeast Asian countries (Liu
et al., 2017). The finding failed to lend support for the EKC. The
study revealed that agriculture reduces CO2 emissions with
causality from renewables to CO2 emissions and from growth
to agriculture. On the contrary, an increase in agriculture was
found to reduce CO2 emission in five MENA countries (Ben Jebli
and Ben Youssef, 2017). Based on the causality, it was discovered
that agriculture Granger-cause economic growth while energy
causes agriculture. However, the bi-directional linkage was found
for agriculture and CO2 emissions. These findings of course are
similar to Olanipekun et al. (2019) who found a positive effect of
agricultural production on pollution in Africa.
The existing literature on agriculture-induced CO2 emissions
is very few and scanty, particularly for Nigeria. The only existing
country-specific study on Agriculture-CO2 emission linkage in
Nigeria is a recent study by Agboola and Bekun (2019), which
suffers from misspecification problems. For example, the authors
used the log forms of agricultural value-added and trade which
are in percentages and hence growth rates. Taking a log of growth
rate is technically wrong and could lead to spurious regression.
Another methodology problem suffered by the study is the
application of a standard Granger causality test withoutf
meeting its fundamental assumption. As noted in the literature, a
traditional Granger causality is used only when the series are all in
levels. The work by Olanipekun et al. (2019) is based on the panel of
African countries, which have country-specific problems. Therefore,
the findings may have limited policy implications for Nigeria. Also,
the existing studies failed to capture structural breaks in the variables
which could alter CO2 emissions in the long run. Therefore, to
properly model agriculture-induced CO2 emissions and EKC in
Nigeria, we incorporated the structural breaks into our model to
examine their effects on the endogenous variable in the long run.
Finally, since Nigeria is blessed with diverse natural resources, we
control for biocapacity to capture the ability of the ecosystem to
produce biological materials demand of the people.
3 February 2021 | Volume 8 | Article 592061
Ali et al. Agricultural Innovation and CO2 Emissions

TABLE 1 | Features of data series using descriptive statistics.

Data series Unit Source Obs. Mean S.D. Skew. Kurt. J-B Prob.

CO2 emissions (CO2) Metric tons per capita WDI 34 −0.5560 0.3201 −0.4302 1.8933 2.7836 0.2486
Income (lnY) Constant 2010 US$ WDI 34 7.4010 0.2140 0.8092 2.2119 4.5900 0.1008
Square of Income (lnY2) Constant 2010 US$ WDI 34 54.8197 3.2037 0.8328 2.2578 4.7103 0.0949
Agriculture, forestry, and fishing, value added per capita (AGR) Constant 2010 US$ WDI 34 5.7494 0.3877 0.4740 1.5226 4.3650 0.1128
Biocapacity (BCP)4 Gha/person GFN 34 −0.2475 0.0903 –0.3720 1.7489 3.0015 0.2230
Energy Use (EU) kg of oil equivalent per WDI 34 6.5739 0.0491 0.5209 2.0616 2.7852 0.2484
capita

Notations: WDI, World Development Indicator; GFN, Global Footprint Network; S.D., standard deviation; Skew, skewness; Kurt, kurtosis; J-B, Jarque-Bera.

MATERIALS AND METHODS
Data Collection
We employed time-series data spanning 1981–2014, selected due
to data availability.1 The variables in the models include CO2
emissions per capita as an endogenous variable while real GDP
per capita, which represents “second order polynomial of real
GDP per capita (GDP2), agricultural value-added; biocapacity
and energy per capita (EU) are exogenous variables. Generally,
CO2 emission per capita measures environmental quality. Real
GDP per capita is used as a proxy for income or wealth,
agricultural value-added per capita is used as a proxy for
agricultural innovation since value is added to the raw
materials of agriculture while Biocapacity per capital measures
the ecosystem recovery. CO2 emissions, real GDP, agricultural
innovation measured by agricultural value-added, and Energy
Use are obtained from the World Development Indicators (WDI)
database,2, while Biocapacity is retrieved from the Global
Footprint Network (GFN) database.3
The selections of these variables are guided by the United
Nations’ long-term plan for Sustainable Development Goals
(SDGs) which emphasizes clean energy, growth, and
environment. Particularly, we included energy use to tackle
goal 6, which targets clean energy and water, energy use. Goal
7, which is centered on the affordability of clean energy, is
facilitated by improvement in agriculture and biocapacity. We
believe that once agriculture is stimulated coupled with
biocapacity, people would be able to afford clean energy. We
included GDP to capture goal 8, which is concerned with
achieving decent work and growth without causing damage to
1
Some of the data employed are only available up to 2014 for the case of Nigeria.
2
https://buff.ly/2DkRfOb
2
https://buff.ly/2DkRfOb
3
https://buff.ly/3gWbT5T
4
“The capacity of ecosystems to regenerate what people demand from those
surfaces. Life, including human life, competes for space. The biocapacity of a
surface represents its ability to renew what people demand. Biocapacity is,
therefore, the ecosystems’ capacity to produce biological materials used by
people and to absorb waste material generated by humans, under current
management schemes and extraction technologies. Biocapacity can change
from year to year due to climate, management, and proportion considered
useful inputs to the human economy”. We follow the National Footprint
Accounts, where biocapacity is calculated by “multiplying the physical area by
the yield factor and the appropriate equivalence factor. Biocapacity is expressed in
global hectares” (Global Footprint Network, 2017).
the environment. Finally, goals 9 and 13, which are concerned
with climate change and carbon sequestration, are represented by
CO2 emissions. The variables, measurements and source are
described in Table 1.
Model Specification
Following Shahbaz et al. (2013), Mesagan et al. (2018), Rafindadi
and Usman (2019), Usman et al. (2020b), the standard EKC
framework is expressed as:
CO2t
Φ0 + α1 Yt + α2 Yt2 + μt (1)
Where Φ0 is the constant, CO2 is the carbon emissions, which
measure environmental quality. Yt is Real GDP, which measures
income while the squared term of real GDP (Yt2 ) is added to
determine whether the validity of the EKC hypothesis. μt embodies
the error term that is invariably presumed to be normally
distributed. In this study, we incorporated agricultural and
biocapacity variables into the standard EKC framework. This is
because, agricultural activities and biocapacity of a country could
contribute or mitigate the rate of carbon emissions as documented
in the earlier studies by Dogan (2016), Sarkodie et al. (2019).
Therefore, our model will be expressed as follows:
CO2t
Φ0 + α1 Yt + α1 Yt2 + α2 AGRt + α3 BCPt + α4 EUt + εt (2)
Where CO2 , Y, and Yt2 remain as defined in Eq. 1. AGR
represents agricultural value-added per capita, a measure of
agricultural innovation; BCPt is the biocapacity per capita; EUt
represents per capita energy consumption, t stands for time
period while εt denotes that the residual term is a white noise
process with variance σ 2 , εt ∼ iid(0, σ 2 ). The natural logarithmic
regression of Eq. 2 is given as follows:
ln CO2t
Φ0 + α1 lnYt + α1 lnYt2 + α2 ln AGRt + α3 lnBCPt
+ α4 lnEUt + εt (3)
Equation 3 is a log-log regression of Eq. 2 to explain the impacts
growth in the long-run. To this extent, all the variables remain as
defined in Eqs. 1 and 2. ln denotes the natural logarithm of the
series. If the variables have a long-run relationship between them,
it therefore, means that they will have a level relationship
specified with long-run parameters so that they can follow the
pattern of error correction model (ECM). The long-run and
short-run parameters are obtained through a dynamic
restricted ECM, resulting from the ARDL approach proposed
by Pesaran et al. (2001) as given below:

Frontiers in Energy Research | www.frontiersin.org 4 February 2021 | Volume 8 | Article 592061

Ali et al. Agricultural Innovation and CO2 Emissions

Δ ln CO2t
α0 + ϕi ln CO2t−1 + θ1 ln Yt−1 + θ2 ln Yt−1

2 breakpoint under the null and alternative hypotheses. To this end,
+ θ3 ln AGRt−1 + θ4 ln BCPt−1 + θ5 ln EUt Lee-Strazicich unit root test is more superior to all other
q p p
structural break unit root tests in the literature.
+
ϕi ln CO2t−i +
α1,i Δ ln Yt−i +
α2,i Δ ln Yt−i
2 In testing the unit root via this test, we applied a “crash” model
i
1 i
1 i
1 which permits for a one-time change in intercept, under the
p p alternative hypothesis with the optimal number of lag k
+
α3,i Δ ln AGRt−i +
α4,i Δ ln BCPt−i determined by beginning the test from the general-to-specific
i
1 i
1 method (Perron, 1989). To perform this test, we began with the
p
maximum number of lagged first-differenced terms, k
8 and
+
α5,i Δ ln EUt−i + εt
i
1
continue to reduce the lagged term if the model is insignificant.
The null hypothesis H0 : α
0 is checked against the alternative
(4)
hypothesis H1 : α < 0. These hypotheses also hold for typical unit
Where the variables remain as defined previously. Δ is a difference root tests applied. We ruled that the series has a unit root in the
operator generically defined as Δyt
yt − yt−1 . The long-run presence of a break if the test value is less than the critical value at
coefficients are obtained from the first part of Eq. 4. The error- 1, 5, and 10% significant levels.
correction term (ECT) can also be obtained as;
ectt
ln CO2t − ln Yt − ln Yt2 − ln AGRt − ln BCPt − ln EUt . The
parameters θ1 , θ2 , θ3 , θ4 , and θ5 are the long-run effects of all the Causality Test
explanatory variables on CO2 emissions. Therefore, to capture the fWe ascertained the direction of causality by applying a
adjustment speed from short-run disequilibrium to long-run Granger causality test within the Toda—Yamamoto
equilibrium, we estimate the conditional error correction model framework (Toda and Yamamoto, 1995) which applies a
given as: modified Wald statistic. The method involves estimating a
vector autoregressive VAR (p) with extra lag d. this generally
q p
denotes (p + dmax ), where p denotes the VAR order and d is the
Δ ln CO2t
β0 +
βi ln CO2t−i +
β1,i Δ ln Yt−i
i
1 i
1
extra lag (dmax ) which is the maximum order of integration in
p p p the VAR system. To apply this method, we augmented the
+
β2,i Δ ln Yt−i
2
+
β3,i Δ ln AGRt−i +
β4,i Δ ln BCPt−i (5) correct VAR order p with d extra lag and used the asymptotic
i
0 i
0 i
0 χ 2 distribution of the Wald statistic to assess the existence of a
p causal relationship. This method is widely accepted in the
+
β5,i Δ ln EUt−i + λectt−1 + εt literature to be superior and richer than the standard Granger
i
0
causality test or VECM causality test. Particularly, the test is
where the speed of adjustment speed is captured by ectt−1 which is suitable and provides robust results regardless of the
defined as the first lag of the residual of the short-run parameters integration order of the series and their co-integration.
are given by βi ’s. To test for possible variable cointegration, we Therefore, the VAR (p + dmax ) is expressed as follows:
applied a level equation based on Eq. 4. As recommended by
Pesaran et al. (2001), an F-test is used for testing the null hypothesis, lnCO2t α ξ 11i ξ 12i ξ 13i ξ 14i ξ 15i ξ 16i lnCO2t−i
⎢
⎡
⎢
⎢ ⎤⎥⎥⎥ ⎡ ⎢
⎢
⎢ β ⎤⎥⎥⎥ ⎢
⎡
⎢
⎢ ξ ξ ξ ξ ξ ξ ⎤⎥⎥⎥ ⎡ ⎢
⎢
⎢ ⎤⎥⎥⎥
which states that α1
α2
α3
α4
α5
0 and the alternative ⎢
⎢
⎢
lnY t ⎥
⎥⎥⎥ ⎢ ⎢
⎢ ⎥
⎥⎥⎥ p ⎢ ⎢
⎢ 21i 22i 23i 24i 25i 26i ⎥
⎥⎥⎥ ⎢ ⎢
⎢
lnYt−i ⎥⎥⎥
⎢ lnY2
⎢ ⎥
⎥⎥⎥ ⎢ ⎢
⎢ ϑ ⎥
⎥ ⎢
⎢
⎢ ξ ξ ξ ξ ξ ξ ⎥ ⎢
⎢ 2 ⎥⎥⎥
hypothesis, which states that α1 ≠ α2 ≠ α3 ≠ α4 ≠ α5
0. This ⎢
⎢ ⎢
⎢ ⎥
⎥ ⎢
⎢ 31i 32i 33i 34i 35i 36i ⎥ ⎥
⎥ ⎢
⎢
⎢ lnY ⎥⎥⎥
⎢
⎢
⎢
t
⎥⎥⎥
⎢ ⎢ ⎥⎥⎥ +
⎢ ⎢ ⎥⎥⎥ × ⎢ ⎢
t−i
⎥⎥
⎢
⎢ lnAGR t⎥ ⎥ ⎢
⎢
⎢ c ⎥
⎥ ⎢
⎢
⎢ ξ ξ ξ ξ
41i 42i 43i 44i 45i 46i ⎥ξ ξ ⎥ ⎢
⎢
⎢ lnAGR t−i ⎥ ⎥⎥
methodology has some enviable advantages. First, it estimates ⎢
⎢ ⎥
⎥ ⎢
⎢ ⎥
⎥ ⎢
⎢ ⎥ ⎢
⎢ ⎣ ξ 51i ξ 52i ξ 53i ξ 54i ξ 55i ξ 56i ⎦ ⎣ lnBCPt−i ⎥⎥⎦
⎥ ⎢
i−1
⎢
⎣ lnBCPt ⎦ ⎣ φ ⎦ ⎥ ⎢ ⎥ ⎢ ⎥ ⎢
both short- and long-run parameters of the model used in this
study. Second, our model is suitable for mixed order of integration. lnEUt ψ ξ 61i ξ 62i ξ 63i ξ 64i ξ 65i ξ 66i lnEUt−i
In other words, this model can be applied regardless of variables ξ 11j ξ 12j ξ 13j ξ 14j ξ 15j ξ 16j ln CO2t−j ε1t
⎢
⎡
⎢
⎢ ξ 21j ξ 22j ξ 23j ξ 24j ξ 25j ξ 26j ⎤⎥⎥⎥⎥⎥ ⎢ ⎡ ln Yt−j
⎢
⎢ ⎤⎥⎥⎥ ⎢ ⎡ ε ⎤⎥⎥⎥
⎢
⎢
⎢
⎢ ⎥ ⎢ ⎢ ⎥ ⎢ 2t ⎥
integrated of order zero, or order one, or mutually cointegrated. ⎢
dmax ⎢
⎢
⎢ ξ 31j ξ 32j ξ 33j ξ 34j ξ 35j ξ 36j ⎥⎥⎥⎥⎥ ⎢ ⎢
⎢ ln Y2t−j ⎥⎥⎥⎥ ⎢ ⎢
⎢
⎢
⎥
ε3t ⎥⎥⎥⎥⎥
Third, the estimation approach yields robust and unbiased +
⎢ ⎢
⎢ ⎥ × ⎢
⎢
⎢ ⎥
⎥
⎥ + ⎢
⎢
⎢ ⎥
⎢
⎢ ξ 41j ξ 42j ξ 43j ξ 44j ξ 45j ξ 46j ⎥⎥⎥ ⎢⎥ ⎢ ln AGRt−j ⎥⎥⎥⎥ ⎢ ⎥ ⎢ ε4t ⎥⎥⎥⎥⎥
estimates irrespective of the sample size. This means that the j
p+1⎢
⎢
⎢
⎢ ⎥⎥ ⎢ ⎢
⎢
⎢
⎢ ⎥
⎥
⎢
⎢
⎢
⎢
⎢ ⎥
⎢
⎣ξ ξ ξ ξ ξ ξ ⎦ ⎢
51j 52j 53j 54j 55j 56j
⎥ ⎣ ln BCP ⎥⎦ ⎢ t−j ⎣ ε ⎥⎥⎦ 5t
model is more appropriate in our case—where the number of
ξ 61j ξ 62j ξ 63j ξ 64j ξ 65j ξ 66j ln EUt−j ε6t
observations is thirty-four.
(6)
Lee-Strazicich Unit Root Test From Eq. 6, the Granger causality running from ln EUt to lnCO2t
The existing traditional unit root tests are found to be inadequate implies that ξ 16i ≠ 0∀i similarly Granger causality running from
and as such provide false outcomes when structural breaks are lnCO2t to ln EUt implies that ξ 16j ≠ 0∀j .
present in the series. To avoid this, in addition to the Augmented The framework for our model is shown in Figure 1, which
Dickey-Fuller (ADF) and Phillips-Perron (PP) tests, we applied a begins with ARDL specification and estimation as well as residual
minimum LM unit root test with one break (Lee and Strazicich, and stability diagnostic tests. The second stage is the estimation of
2003). This test accommodates information concerning a single the structural model based on impulse—response and variance
unknown break and tackles the inaccuracy problem of identified decomposition analyses.

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Ali et al.
FIGURE 1 | Model Framework.
RESULTS AND DISCUSSION
Statistical Analysis
The mean of the variables showed that incomes have the highest
meanwhile CO2 emissions and biocapacity have low and negative
mean scores. The standard deviations are also low with energy use
having the lowest. This suggests that all the variables are less
volatile over the study period. The skewness of the variables
indicates that CO2 emissions and biocapacity are negatively
skewed while income, the squared term of income, agriculture,
and energy use are positively skewed with the values tending
toward zero. More so, the kurtosis of the variables indicated that
all the series have a positive kurtosis with Jarque-Bera values
exceeding the region of normal distribution as can be seen by the
probability values.
The graphical plots of the variables in described in Figure 2.
This is necessitated by the presence of drift, trend, and seasonality
as well as structural breaks. As shown by the Figure, all the
variables seem to have structural breaks. These breaks are more
evident in CO2 emissions, biocapacity, and energy use with no
precise evidence of a trend. For income, squared income, and
agriculture, it is observed that the variables begin to trend
upward.
Stationary Test Results
Before estimating the model for this study, we first, applied the
usual unit root tests via ADF and PP as earlier stated. The
results given in Table 2, Panel A show that all the series (CO2
emissions, Income, the square of income, agricultural
innovation, biocapacity, and energy use) are not stationary
in their levels. However, after we took their first differences,
they all turn out to be stationary. This means that the variables
are classified as I (1) process. To circumvent the inadequacy of
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Agricultural Innovation and CO2 Emissions
conventional unit root tests, we applied the minimum LM unit
root test with one break. The results as displayed in Table 2,
Panel B validated the earlier results that all the series are
integrated of order one, i.e., I (1) process. Also, the identified
breakpoint for CO2 emissions is 1999, income and its squared
term is 2006; agricultural value added is 2001, biocapacity is
2010, and energy use is 2002. The break in 1999 could be
attributed to the effect of general elections which lowers the
pressure on stimulating growth and hence CO2 emissions. The
break in 2002 may be caused by the effect of pre-2003 general
elections. The 2006 break in income and its squared term can
be attributed to exchange rate volatility, which significantly
affected income levels. Finally, the 2010 break was caused by
2008 worldwide financial disaster which affected the
agricultural sector significantly.
Co-Integration Tests
Having established the integrating properties of the variables
in our model, the next is to check whether co-integration exists
among the variables. To do this, we applied the ARDL bounds
testing approach. The robustness of this test is carried out
based on the combined cointegration test (Bayer and Hanck,
2013). The lag length selection of three based on the Akaike
information criterion (AIC) is shown in Table 3 while Table 4
provided the reports of the bounds-testing co-integration.
According to the reports, we found that when each of the
variables is treated as endogenous, we confirmed five co-
integrating vectors, which by implication means that a long-
run relationship exists between the sampled series. These
findings are validated by the combined co-integration test
of Bayer-Hanck Table 5, which found a co-integration in all
the six equations, implying that there is a long-run nexus
between the investigated series.
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Ali et al.
FIGURE 2 | Natural logarithms of CO2, Y, Y2, AGR, BCP, and EU.
ARDL Estimated Results
Table 6 reports the long-run and short-run parameters of the
ARDL model estimator. Based on the parameters of the model, we
find evidence that real income and its squared term have a positive
and negative relationship with CO2 in the long run and short run,
respectively. The negative effect of squared term of income indicates
a breakaway of CO2 emissions and real income at higher income
level. This result, therefore, suggests the validation of the EKC
hypothesis in Nigeria both in the long run and short run. The
plausible reason for the findings is that Nigeria being an oil-
exporting country mostly engages in excessive use of fossil fuels
and cement manufacturing. Furthermore, a larger carbon is emitted
during the utilization of liquid and gas fuels as well as gas flaring.
Therefore, the validity of the EKC hypothesis in this study is
consistent with previous studies such as Galeotti et al., (2006),
Shahbaz et al. (2013), Shahbaz et al. (2017), Usman et al. (2019,
2020), Agboola and Bekun (2019), Ike (2020a, 2020b, 2020c),
Iorember et al. (2020). The effect of agricultural innovation on
CO2 emissions is positive, inelastic, and statistically significant both
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Agricultural Innovation and CO2 Emissions
in the long run and short run. This implies that a 1% increase in
agricultural innovation would cause CO2 emissions to rise by
0.5145% in the long run and 0.5329% in the short run. The
economic reason supporting this result is that agricultural
practices such as bush burning, tillage, fertilization, deforestation,
and desertification as well as raising livestock like cattle, pigs, fish and
poultry could accelerate the level of anthropogenic carbon emissions.
This finding agrees with a study that found a positive relationship
between agriculture and CO2 emissions in Nigeria (Agboola and
Bekun, 2019). Our result also corroborates with Olanipekun et al.
(2019) who found a similar result for African countries and for
Tunisia (Ben Jebli and Ben Youssef, 2017). Moreover, we found that
after taking the first lag of agricultural value-added, its effect on CO2
emissions was negative, indicating that the historical effects of
agricultural value-added underpin CO2 emissions mitigation. The
negative relationship between agriculture and CO2 emissions is
supported by a finding documented for 53 countries in the world
(Rafiq et al., 2016); five MENA countries (Ben Jebli and Ben Youssef,
2017), and Turkey (Dogan, 2016).
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Ali et al. Agricultural Innovation and CO2 Emissions

TABLE 2 | Augmented Dickey-Fuller (ADF), Phillips-Perron (P-P) and Lee- TABLE 4 | Estimates of ARDL bounds test for cointegration.
Strazicich (L-S) Unit Root tests.
Variable lnCO2 lnY lnY2 lnAGR lnBCP lnEU
Panel A: ADF Test and P-P Test.
F-Statistic 3.6484* 8.4380*** 8.5311*** 2.1547 6.4649*** 4.2691**
Series ADF Test P-P Test
k 5 maxlags 3
Intercept Intercept and Intercept Intercept and Critical 1% 5% level 10% level
Trend Trend value level
Lower 3.41 2.62 2.26
lnCO2 −1.8946 −1.7935 −1.9211 −1.7935 bounds
(0.3307) (0.6850) (0.3190) (0.6850) Upper 4.68 3.79 3.35
lnY 0.5533 −1.8261 0.3758 −2.6247 bounds
(0.9858) 0.6628 (0.9788) (0.2725)
lnY2 0.6252 −1.7495 0.4530 −2.5692 Notations: ** refers to the rejection of no level relationship at 5% significance level. The
(0.9881) (0.6995) (0.9823) (0.2956) critical value is determined with unrestricted intercept and no trend. The maximum lag
lnAGR 0.3778 −2.0351 0.3778 −2.0380 order is three and the optimal lag order is selected by the Akaike Information
(0.9789) (0.5613) (0.9789) (0.5598) Criterion (AIC).
lnBCP −1.6987 0.5321 −1.3887(0.5758) −1.2126
(0.4220) (0.9989) (0.8913) run, while in the short run, it reduces CO2 emissions by 1.1179%.
lnEU −1.1488 −2.6712 −0.9528 −2.3954
(0.6843) (0.2541) (0.7582) (0.3750)
This is because biocapacity is a non-carbon measurement of the
ΔlnCO2 −5.5482*** −5.5298*** −5.5482*** −5.5299*** ability of the ecosystem to renew the biological materials demand
(0.0001) (0.0004) (0.0001) (0.0004) by the people from the earth’s surfaces. Therefore, it is consistent
ΔlnY −4.0958*** −5.2967*** −3.6533** −4.0320** with the Sarkodie and Strezov (2018) who found a negative
(0.0034) (0.0018) (0.0100) (0.0176)
relationship between biocapacity and CO2 emissions for the US,
ΔlnY2 −4.0676*** −4.2374** −3.6276** −4.0405**
(0.0036) (0.0121) (0.0107) (0.0173)
Australia, China and Ghana. Finally, the influence of energy use is
ΔlnAGR −5.5598*** −5.5648*** −5.5598*** −5.5648*** positive, elastic and statistically significant with CO2 emissions.
(0.0001) (0.0004) (0.0001) (0.0004) This means that a 1% increase in energy use would increase CO2
ΔlnBCP −2.7555* −4.2625** −8.2826*** −9.6465*** emissions by 4.2620% in the long run and 1.1211% in the short run.
(0.0765) (0.0119) (0.0000) (0.0000)
The results further showed that from one lag period afterward, the
ΔlnEU −5.2218*** −5.1589*** −5.8896*** −7.2377***
(0.0002) (0.0011) (0.0000) (0.0000) effect of energy use on CO2 emissions turns negative. The implication
for this result is that most of the Nigerian energy sources are stemming
Panel B: Lee-strazicich (L-S) unit root test traditional biomass and waste, which could explain about 83% of the
Series L-S test at Level L-S test at first difference total primary production, while 16% is accounted for by the fossil fuels
LM Statistics Break-Point LM Statistics Break-Point and 1% by hydropower. These energy sources are renewables, which
emit low carbon and GHGs. This reason is also attributed to the
lnCO2 −2.3135 (4) 1999 −5.0679 (0)*** 1991
negative effects of agriculture from the first lag afterward.
lnY −1.3398 (7) 2006 −5.5484 (8)*** 2003
lnY2 −1.4133 (7) 2006 −5.5933 (8)*** 2003 The speed of adjustment (ECT t-1 ) is negative and
lnAGR −2.1617 (0) 2001 −6.0245 (0)*** 2009 significant with a value −0.9938. This implies that the
lnBCP −1.5557 (1) 2010 −4.5564 (3)*** 1999 speed of convergence from short-run variation toward
lnEU −2.9905 (1) 2002 −3.6788 (0)*** 1991 equilibrium long run is about 99% yearly. We also tested
Notations: ***, **, and * denote statistical significance level at p-value < 0.01, <0.05, and the diagnostics of the model estimated. The results showed
<0.10. ADF, Augmented Dickey-Fuller Test; P-P, Phillips-Perron Test; L-S, Lee- that there is no case of serial correlation and conditional
Strazicich test.
heteroscedasticity problems. Similarly, the functional form of
the model is correctly constructed with evidence that the
error term is normally distributed. Furthermore, apart from
TABLE 3 | VAR optimal lag order selection criteria.
the RAMSEY RESET test, we applied the cumulative sum
Lag LogL LR FPE AIC SC HQ (CUSUM) and CUSUM squares (CUSUM Sq.) to test the
0 211.0216 NA 7.26e−14 −13.22720 −12.94965 −13.13673
stability of the model. As shown in Figure 3, both tests
1 401.9980 295.7053 3.46e−18 −23.22567 −21.28285 −22.59236 revealed that the model is stable and adequate both in the
2 443.1486 47.78790 3.29e−18 −23.55798 −19.94988 −22.38183 long and short run.
3 530.1039 67.32022* 2.96e−19* −26.84542* −21.57204* −25.12643*

Notations: * indicates the optimal lag order selected by the criterion. LR, sequential
modified LR test statistic (each test at 5% level); FPE, Final prediction error; AIC, Akaike
information criterion; SC, Schwarz information criterion and HQ, Hannan Quinn
information criterion.
Furthermore, the influence of biocapacity on CO2 emissions is
negative, inelastic and substantial in the long run while in the short
run, it is negative, elastic and significant. Particularly, a 1% increase
in biocapacity would reduce CO2 emissions by 0.1853% in the long
Causality and Innovation Accounting
Theoretically, if a co-integration is found, there must be at least
causality between the variable. As displayed in Table 7, we found
evidence that a uni-directional causality runs from agriculture to CO2
emissions, which contradicts the earlier finding by Agboola and Bekun
(2019). The plausible reason could be attributed to the fact that the
study applied a standard Granger causality which tends to produce a
spurious result if the variables are not all integrated at levels. However,
our finding agrees with Ben Jebli and Ben Youssef (2017) who found

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Ali et al. Agricultural Innovation and CO2 Emissions

TABLE 5 | Estimates of cointegration test via Bayer-Hanck.

Model EG–JOH EG–JOH–BO–BDM Cointegrated

lnCO2
f(lnY , lnY 2 , lnAGR, lnBCP, lnEU) 55.813** 111.37** YES

lnY
f(lnCO2 , lnAGR, lnBCP, lnEU) 16.036** 72.327** YES
lnAGR
f (lnY2 , lnY, lnCO2 , lnBCP, lnEU) 55.515** 166.039** YES
lnBCP
f(lnAGR, lnY2 , lnY, lnCO2 , lnEU) 55.832** 166.36** YES
lnEU
f (lnBCP, lnAGR, lnY2 , lnY, lnCO2 ) 56.290** 166.81** YES

Notations: ** refers to the rejection of null hypothesis of no cointegration at p-value < 0.05 and maximum lag order of three; with critical values 10.419 and 19.888 for EG–JOH and
EG–JOH–BO–BDM at 5% level.

TABLE 6 | ARDL parameter estimates. TABLE 7 | Result of causal relationship test.

Overall χ 2-Stat
ΔlnCO2t Coefficient t-Statistic p-value Dep. Variable lnCO2 lnY lnAGR lnBCP lnEU
(Probability)

Constant −145.65*** −6.1689 0.0000 lnCO2 – 3.1175 6.3863* 5.5168 3.8677 28.356**
ΔlnY 58.557* 2.2203 0.0464 (0.3739) (0.0935) (0.1376) (0.2761) (0.0189)
ΔlnY2 −3.9902*** −3.9772 0.0018 lnY 7.1124* – 4.2074 2.9773 1.8814 26.752**
(0.0646) (0.2399) (0.3951) (0.5974) (0.0308)
ΔlnAGR 0.5329** 2.3411 0.0373
lnAGR 4.4554 3.3004 – 10.564** 9.4291** 59.596***
ΔlnAGRt-1 −0.0694* −2.1039 0.0572 (0.2163) (0.3476) (0.0143) (0.0241) (0.0000)
ΔlnAGRt-2 −0.4014** −2.4840 0.0287 lnBCP 16.554*** 8.1515** 6.7606* – 4.4941 30.445**
ΔlnBCP −1.1179*** −3.5703 0.0039 (0.0009) (0.0430) (0.0799) (0.2128) (0.0104)
lnEU 6.9628* 6.3866* 7.5610* 6.6964* – 27.956**
ΔlnBCPt-1 −1.0444 −1.3698 0.1958
(0.0731) (0.0942) (0.0560) (0.0822) (0.0218)
ΔlnBICPt-2 1.3185** 2.5667 0.0247
ΔlnEU 1.1211*** 4.3240 0.0010 Notations: ***, ** and * denote rejection of the null hypothesis at 1, 5, and 10% significant
ΔlnEU t-1 −1.2205** −2.2746 0.0421 levels. p-values are presented in parenthesis (.). The maximum lag order selected is three
ΔlnEUt-2 −2.1651** −3.3659 0.0056 based on Akaike Information Criterion [AIC].
ECTt-1 −0.9938*** −6.1678 0.0000
Long-run Parameters
lnY 36.293** 2.8296 0.0152 We step forward to validate our findings via the innovation
lnY2 −2.0206** −3.3947 0.0053 accounting test of variance decomposition and
lnAGR 0.5145** 3.1414 0.0085
impulse—response function analyses based on 10-year forecast
lnBCP −0.1853*** −10.310 0.0000
lnEU 4.2620*** 4.8408 0.0004 horizons. From Table 8, we found that except for energy use, CO2
Residual diagnostics emissions have the highest contribution to the variance
Statistic p-value decomposition of all the variables in the model. Similarly, energy
χ ARCH 0.0476 0.8289 use has the lowest contribution to the variance decomposition of all
χ BG-LM 0.2089 0.7271
the variables. Starting from the variance decomposition of CO2
χ RESET 1.2783 0.4610
χ NORM 4.3722 0.1124 emissions, we observed that own shock contributed about 65.4%,
CUSUM Stable followed by the contribution from agriculture which accounted for
CUSUM Sq. Stable about 11.65%. Energy use has the lowest contribution of 1.46%, which
Notations: ***, ** and * denote significance at 1%, 5%, and 10% significance level, confirms the earlier results that about 83% of total energy
respectively. χ ARCH denotes ARCH Test for Heteroscedasticity [1]; χ BG-LM Breusch- consumption in Nigeria stems from the renewables which emit
Godfrey Serial LM Test [1]; χ RESET represents Ramsey RESET Test [1]; χ NORM denotes low carbon dioxide. More so, from the variance decomposition of
Jarque-Bera Normality Test; and the maximum lag order selected is three based on
Akaike Information Criterion [AIC].
income and its squared term, we found that CO2 emissions
contributed about 56.01 and 56.4%. This is followed by the
contribution of agriculture, which accounted for about 22.8 and
agriculture and CO2 emissions to have a causal link in the long run for 22.7%, respectively. The contribution of energy use is about 1.60%.
five MENA countries. We also found that CO2 emission could predict We further found that while agriculture contributed about 32.01% due
income, biocapacity, and energy use. Furthermore, our results provide to own shock, the contribution of CO2 emissions is about 49.42%
evidence that a bidirectional causal relationship exists between while energy use is about 2.41%. The results further suggested that for
agriculture and biocapacity as well as agriculture and energy use. variance decomposition of bio-capacity, own shock contributed just
These results imply that agriculture causes biocapacity and energy use 13.23% while CO2 emissions contributed about 35.78% with 1.71%
and vice versa. The results that agriculture has predictability for energy contribution from energy use. Additionally, the highest contributor to
use are consistent with Agboola and Bekun (2019). This is also the variance decomposition of energy use is squared term of income
consistent with Ben Jebli and Ben Youssef (2017) who found a with about 31.24%, apparently followed by agriculture with about
long-run causality running from renewable energy to agriculture. 23.09%. The contribution from its own shock is about 3.83%.
There is also evidence that income level and its squared term have Therefore, from the results of the forecast error variance
predictability for energy use. This result also corroborates a similar decomposition, we observed that 22.79% of agriculture
reported case in Ben Jebli and Ben Youssef (2017). corresponded to 49.43% CO2 emissions. We also found that 5.95%

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Ali et al.
FIGURE 3 | Plot of cumulative sum (CUSUM) and cumulative sum of squares (CUSUM Sq.) at 5% significance.
biocapacity caused 35.78% CO2 emissions, while 1.61% of energy use
led to just 16.27% CO2 emissions.
Figure 4 presents the impulse responses of all the variables to
an innovation shock. As shown, CO2 emissions responded
positively to the innovation shocks up to the eighth horizons
and consequently turned negative. This implies that about 8th
horizons, CO2 emissions responds negatively to innovation
shocks. For income, we found that the response of income to
innovation shocks is positive until sixth horizon. The response
became negative between sixth and eighth horizons, after which it
became positive. The same is not observed in the case of income
squared. The response of the square of income is positive with no
visible evidence of a trend (i.e., response moves ups and downs)
until it became negative after the sixth horizons. The response of
agriculture to innovation shocks is positive over the periods of
horizons, while that of biocapacity is characterized by upward
and downward movements over the entire horizons. Finally, the
response of energy use to innovation is positive up to the fourth
horizon. However, between fourth and sixth horizons, the
response turned negative and consequently crossed to the
Frontiers in Energy Research | www.frontiersin.org
Agricultural Innovation and CO2 Emissions
positive region in the mid-sixth horizons. The results have
validated the causality we have found between the variables.
Counterfactual Change
The traditional ARDL estimation procedure produces in-sample
parameters that often complicate for statistical inferences. The
novel dynamic ARDL simulations technique was developed by
Jordan and Philips (2018) and utilized in the seminal work of
Sarkodie et al. (2019). The versatility and policy usefulness of the
estimation method has been applied in several disciplines (Owusu
and Sarkodie, 2020b; Sarkodie et al., 2020; Shabbir et al., 2020). Thus,
we utilized the novel dynamic ARDL simulations to examine the out-
sample effects of counterfactual shocks in exogeneous independent
variable at a given time period. This is appropriate to examine how
CO2 emissions will respond to future shocks from a specified
exogeneous regressor. The counterfactual shocks observed in
Figures 5A,B reveals that −1% change in predicted income has
no potential effect in the first 9 years but a 1.4% positive rebound
effect of CO2 emissions is observed in the 10th year and stabilizes
from the 13th year and thereafter. Contrary, a 1.4% negative rebound
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Ali et al. Agricultural Innovation and CO2 Emissions

TABLE 8 | Forecast error variance decomposition.

Period S.E. LNCO2 LNY LNY2 LNAGR LNBCP LNEU

Variance decomposition of LNCO2

1 0.197783 100.0000 0.000000 0.000000 0.000000 0.000000 0.000000
2 0.273088 89.92285 0.005229 0.488270 4.837938 4.049902 0.695809
3 0.314053 81.32525 2.371251 0.637872 8.005676 7.088864 0.571086
4 0.354639 75.11586 3.399162 0.914946 10.67356 8.865322 1.031147
5 0.381760 76.24208 2.954029 2.910218 9.349056 7.652356 0.892261
6 0.400128 77.31605 3.014917 2.907263 8.520004 7.297975 0.943793
7 0.415104 72.37701 3.775574 7.064254 8.976632 6.808448 0.998083
8 0.428986 67.77533 3.777963 9.747452 11.04467 6.377472 1.277116
9 0.433748 66.41474 3.803210 10.62004 11.52412 6.354093 1.283789
10 0.440447 65.34096 3.786439 10.51453 11.64984 7.251506 1.456723
Variance decomposition of LNY
1 0.029063 5.292328 94.70767 0.000000 0.000000 0.000000 0.000000
2 0.040972 6.386989 88.87589 0.080218 0.864025 2.690475 1.102407
3 0.054431 25.95946 67.99671 2.676477 0.489578 2.222162 0.655611
4 0.066514 39.91497 51.60853 1.822133 3.242783 2.529720 0.881856
5 0.078531 51.33080 37.48531 2.299697 5.496725 2.719670 0.667795
6 0.093188 57.22945 26.82302 1.638021 10.24745 3.313354 0.748700
7 0.107446 57.38390 20.38062 1.267568 16.07977 3.902453 0.985693
8 0.119903 57.12963 16.39636 1.050068 19.46049 4.717545 1.245907
9 0.130497 56.71157 13.90459 0.886627 21.48559 5.603319 1.408308
10 0.138513 56.00842 12.82279 0.823074 22.79176 5.946078 1.607876
Variance decomposition of LNY2
1 0.422639 5.229694 94.75609 0.014214 0.000000 0.000000 0.000000
2 0.597594 6.336777 88.81038 0.166846 0.898874 2.727283 1.059839
3 0.796691 26.01985 67.69092 2.909043 0.505855 2.245770 0.628571
4 0.975858 40.14938 51.31698 1.957288 3.196494 2.518463 0.861393
5 1.155144 51.66057 37.13363 2.428673 5.425302 2.703326 0.648501
6 1.372568 57.50554 26.47666 1.723910 10.22156 3.333769 0.738561
7 1.584764 57.63108 20.03789 1.321144 16.08435 3.939201 0.986342
8 1.771548 57.45140 16.05417 1.076937 19.41631 4.759583 1.241598
9 1.931721 57.08642 13.57831 0.906086 21.38109 5.649863 1.398239
10 2.054074 56.41126 12.50546 0.830819 22.67254 5.983218 1.596702
Variance decomposition of LNAGR
1 0.049907 0.437473 19.88487 0.304975 79.37268 0.000000 0.000000
2 0.077316 11.69704 36.18627 1.992992 38.18471 8.298361 3.640622
3 0.115011 53.05118 20.56215 1.806231 18.20089 4.465412 1.914145
4 0.152046 58.65877 14.09475 2.578577 19.19577 3.972871 1.499259
5 0.172462 55.63091 10.95529 2.638771 23.60824 5.611187 1.555599
6 0.192945 53.14235 9.165023 2.404748 27.05928 6.067328 2.161266
7 0.209999 54.10163 7.783599 2.040717 28.45178 5.621117 2.001163
8 0.221839 53.61689 7.014303 2.000013 29.08464 6.325551 1.958601
9 0.230978 51.48119 6.476969 2.957715 30.58347 6.247721 2.252935
10 0.239316 49.42350 6.513065 3.720042 32.01724 5.917319 2.408833
Variance decomposition of LNBCP
1 0.033538 10.59196 2.564659 56.42735 0.836321 29.57971 0.000000
2 0.044758 21.94917 1.606599 51.19125 6.864720 18.12459 0.263661
3 0.060032 30.04995 0.992346 50.53017 6.194460 10.59327 1.639810
4 0.064258 32.46540 2.421187 44.17795 8.009600 11.03297 1.892896
5 0.067864 32.04006 5.756787 39.90412 9.835110 10.48760 1.976320
6 0.069500 32.13851 5.501092 39.50758 10.69652 10.21075 1.945554
7 0.075723 29.03223 4.726120 35.25818 11.51671 17.45330 2.013455
8 0.078359 29.52977 6.926565 34.42426 10.77365 16.34744 1.998318
9 0.088678 31.98048 7.989368 35.89116 8.474132 14.07272 1.592135
10 0.094210 35.77539 8.596566 32.08812 8.602365 13.22847 1.709093
Variance decomposition of LNEU
1 0.019621 14.47314 17.49211 58.86980 3.639832 0.000978 5.524152
2 0.024501 14.78441 28.92593 40.41996 8.134298 3.531750 4.203658
3 0.026886 12.38394 29.81878 33.69252 9.212476 10.39135 4.500936
4 0.029468 12.78859 27.12206 38.03187 8.176971 10.09551 3.785002
5 0.032956 21.46875 23.63266 35.21114 7.397679 8.933846 3.355922
6 0.035107 29.60180 21.28024 31.09313 6.528295 8.017112 3.479426
7 0.040117 23.89969 19.95402 36.51235 10.16050 6.400995 3.072439
8 0.044915 19.17748 17.38281 34.72435 19.70117 5.645583 3.368600
9 0.047124 17.44620 15.79875 32.32616 23.40549 7.312334 3.711068
10 0.048944 16.27055 15.40704 31.24378 23.09072 10.15206 3.835860

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Ali et al.
FIGURE 4 | Impulse Response Functions (IMFs).
effect is observed after 10 years of 1% shock in predicted income but
turns steady after 13 years. This implies that wealth has a long-term
mitigating effect on CO2 emissions—corroborating the notion of
pollute in poverty, clean when wealthy.
A similar trend is observed in Figures 5C,D, however, −1%
shock in predicted energy utilization leads to over 5% decline in CO2
emissions from the 10th year but reaches a steady-state in the 14th year
and afterward. In contrast, over 5% increase in CO2 emissions is
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Agricultural Innovation and CO2 Emissions
observed after 9 years of no impact at a 1% change in energy
consumption. Thus, energy intensity has an escalation effect on
CO2 emissions, which calls for energy efficiency, management, and
conservation options to decarbonize energy utilization. Unlike income
and energy utilization, there is evidence of very little impact
(∼0.001%) observed in CO2 emissions at −1% change in
predicted agricultural innovation in the first 10 years. However,
a sharp decline of CO2 emissions by 0.48% is noticed in the 11th
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Ali et al.
FIGURE 5 | Counterfactual shocks (A) −1% Change in Predicted Income (B) 1% Change in Predicted Income (C) −1% Change in Predicted Energy Use (D) 1%
Change in Predicted Energy Use. Legend: The filled-black circle denotes the predicted shock whereas sunflower lime, emerald and cranberry colored spikes refer to
statistical significance at 25, 10, 5% level.
year but a “noisy” effect of reduction in CO2 is observed thereafter.
A 1% shock in predicted agricultural innovation escalates CO2
emissions by 0.47% from the 11th year and afterward (Figures
6A,B). The relatively low impact of agricultural innovation on CO2
emissions compared to energy utilization—can be attributed to
vintage agricultural practices, mechanization, and technologies for
value addition. This implies that the implementation of
modernized and sustainable agricultural process may have a
long-term effect, leading to a decarbonized agrarian economy.
Regeneration of the ecosystem plays an essential role in
reducing carbon footprint. We observe in Figures 6C,D that
−1% shock in predicted biocapacity increases CO2 emissions by
almost 1% after 9 years whereas 1% change in predicted biocapacity
declines CO2 emissions by ∼1%. Implying that a reduction in
ecological footprint will improve the regenerative capacity of the
ecosystem, hence, reducing emissions in the long-term.
CONCLUSION AND POLICY
IMPLICATIONS
Agrarian-based economies are often characterized by natural resource
exploitation and ecological degradation. In this study, we assessed the
impact of agricultural innovation and biocapacity on carbon-based
emissions and tested the validity of the EKC hypothesis in Nigeria. We
applied several estimation techniques including the novel dynamic
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Agricultural Innovation and CO2 Emissions
ARDL simulations, with data from 1981 to 2014. The empirical
evidence based on the ARDL procedure confirmed the long- and
short-run validity of the EKC hypothesis for Nigeria. We found that
agricultural innovation and energy utilization escalate the levels of
anthropogenic CO2 emissions. In contrast, an expansion of the
regenerative capacity of the ecosystem is found to decline the
outgrowth of CO2 emissions. The causality revealed that agricultural
innovation has strong predictive power on CO2 emissions. Similarly,
we found income level to predict long-term energy utilization. The
results indicated that CO2 emissions predict income, biocapacity and
energy use while feedback causality occurs between agriculture and
biocapacity and again agriculture and energy use. These findings were
validated by the variance decomposition and impulse-response
function analyses. Particularly, we found that 22.79% of agricultural
innovation corresponds to 49.43% CO2 emissions. We also found that
5.95% biocapacity caused 35.78% CO2 emissions, while 1.61% of
energy use led to just 16.27% CO2 emissions. In contrast to the in-
sample estimation techniques, the counterfactual shocks from the novel
dynamic ARDL simulation showed favourable mitigation effects of
income, and biocapacity on CO2 emissions whereas escalation effects of
agricultural innovation and energy utilization were also noticed.
These findings demonstrate that improvement in livelihoods,
environmental awareness creation, and prioritization of
ecosystem management and restoration will have a long-term
effect on environmental sustainability.
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Ali et al.
FIGURE 6 | Counterfactual shocks (A) −1% Change in Predicted Agricultural Innovation (B) 1% Change in Predicted Agricultural Innovation (C) −% Change in
Predicted Biocapacity (D) 1% Change in Predicted Biocapacity. Legend: The filled-black circle denotes the predicted shock whereas sunflower lime, emerald and
cranberry colored spikes refer to statistical significance at 25, 10, 5% level.
Therefore, based on these findings, to achieve carbon
sequestration in Nigeria, there is a need for sustainable and
clean energy policies that have low environmental damaging
effects. Such policies would discourage the excessive use of
traditional biomass and fossil fuels. Second, decarbonizing
agricultural innovations will include sustainable agricultural
practices that encourage clean and renewable energy
utilization for agricultural activities. For example, solar energy
can be extended to greenhouse heating and cooling, product
drying and lighting, in addition to irrigation in the farm field.
More so, for improvement in soil, greenhouse, and barns, as well
as heating the soil and drying agricultural products, geothermal
can be applied. Furthermore, bioenergy can be used to power
machinery whereas wind and hydro can be used to generate
electricity, irrigate, and process crops. In addition to the above, we
suggest a number of policy instruments to mitigate carbon
dioxide emissions in Nigeria. These instruments include the
use of fiscal instruments such as taxes and fees. We also
suggest that financial instruments like subsidies can also be
used to regulate the behaviors of the polluters. The coercive
power of the state can be applied on polluters who go beyond the
avoidable levels of pollution as prescribed by industrial emission
standards.
To this end, future studies can shift from theoretical
investigation to undertake a randomized controlled trial
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Agricultural Innovation and CO2 Emissions
that examines the effect of sustainable agricultural practices
on CO2 emissions. Such experimental studies will improve the
global debate on emissions.
DATA AVAILABILITY STATEMENT
Publicly available datasets were analyzed in this study. This
data can be found here: https://databank.worldbank.org/
reports.aspx?source=World-Development-Indicators. All
scripts from the estimation method are available upon
reasonable request.
AUTHOR CONTRIBUTIONS
AA: Supervising and editing-original draft. MU: Writing and
editing- original draft. OU: Conceptualization, Formal analysis,
Investigation, Methodology. SS: Writing - review & editing,
Funding acquisition, Validation, Visualization.
FUNDING
Open Access funding provided by Nord University.
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Ali et al.
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Conflict of Interest: The authors declare that the research was conducted in the
absence of any commercial or financial relationships that could be construed as a
potential conflict of interest.
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